Planning ahead with clean capital – the best source of funds with which to buy UK property

Remittance basis users, who only need pay tax on foreign income and gains to the extent that they are brought to the UK, must be careful to purchase property, fund a deposit or pay ATED charges using clean capital if possible. E.g. Foreign income and gains earned before a non-domiciled person became UK resident, or monies that were a gift or inheritance can be used to buy property without creating a taxable remittance. Mark Davies & Associates are able to analyse funds brought to the UK for such a purpose and calculate any tax due. We can also help to segregate sources of capital, income and gains before a property is bought, or better still, before a client becomes UK resident, in order to ensure that only clean capital is utilised.

The danger of remitting taxable foreign income and gains to the UK is also present if the purchase of a property is by way of a loan. This loan is viewed by HMRC as a UK relevant debt and if any capital repayments or interest on the loan are paid using foreign income or gains it is treated as a taxable remittance. Our team of advisers are available to review your financial affairs in order to spot the traps of taxable remittances and advise on how to avoid them. Contact us here.

domicile
Mark Davies

BA (Hons), CTA
Managing Director